GIBBS: You know the last time I saw Britney Spears on stage with a politician, the guy looked a lot like John McCain, because that's who it was. It was John McCain. ... We'll let them take the low road; it's a place they feel very comfortable in.

On why Obama isn't doing any town halls with McCain, Gibbs insisted Obama camp did offer to do town halls (two as far as we know. McCain's campaign asked for 10. So far, they have done zero together.)

GIBBS: ...We did; we offered... Maybe Nicolle can figure out...

WALLACE [smiling]: We would love that Robert; we would just love that.

GIBBS [laughing]: Well, then you know, maybe you should have Rick dig up the letter we sent, saying we would be glad to do this. ["Rick" is Rick Davis, McCain's campaign manager.] I mean, this is silly. I think this ad is silly. And I think what we have here is very serious times...

Joe Scarborough raised if Gibbs' statement meant that Obama would agree to 10 town hall meetings and sent a letter saying so.

GIBBS: No, we didn't...

WALLACE: Let's nail him down, Joe. We would love this. Yesterday Barack Obama challenged John McCain to a duel and I hope that was code word for the town hall. We don't consider them duels, but we'd love to stand shoulder to shoulder [Gibbs smirking] and talk about these issues. We, as soon as Sen. Obama...

WALLACE: No, look [smiling]. Oh, God, you know. Listen, you talk about the low road [Gibbs smiling widely]. If we wanted to take the low road, we'd have to ask you to pull over. The first negative attack ad in this campaign came from your campaign [Gibbs in full, rolling laughter, shaking head]. And I think that, when you walk around, talking about knife fights, and challenging the Republican nominee to a duel, you are insulting the American voters, who have serious problems. You talk about serious problems; we have policies and plans to solve serious problems. And the American people want to be inspired -- and not just by words, but by deeds. And I think that's where this real gap is showing up on your side.

Later, when Gibbs was pressed on the town halls first by Wallace and then Scarborough, Wallace said, "Sorry, I'm so excited" as Scarborough asked the question. Gibbs said he couldn't remember how many town halls were offered in the letter, and then blamed the McCain campaign for it not happening.

WALLACE: This is the audacity of spin; this is too much [laughing].

Scarborough then asked Wallace if McCain and the campaign stands by his charge that Obama would rather lose a war to win a campaign. (That's at about 7:50.)

WALLACE: Our position is that he placed a higher premium on doing what needs to be done to win an election than having the judgment necessary to win a war.

And it went on to the end with Scarborough suggesting they call each other and make up.